Static scoring generally estimates the revenue impact of fiscal changes by assuming that taxpayers and businesses won't alter their behaviors significantly. In contrast, dynamic scoring considers how tax policy changes can influence broader economic activities, potentially affecting overall revenue collections. This Memorial calls for a detailed analysis, including examples of both scoring approaches for fiscal changes that exceed specific thresholds. The findings are intended to guide future policy decisions and improve the accuracy of revenue projections in the state's budgetary processes.
Summary
House Memorial 51 (HM51) serves as a formal request urging the Consensus Revenue Estimating Group to investigate and provide reports on the implications of static and dynamic scoring in New Mexico's fiscal policy proposals. The bill emphasizes the importance of accurate economic evaluation for maintaining the state's balanced budget—as mandated by its constitution—and to ensure tax and budgetary decisions do not lead to unintended fiscal shortfalls. The necessity for this investigation arises amidst recent tax policy changes in New Mexico and the ongoing debate surrounding the efficacy of scoring methods in economic forecasting.
Contention
While dynamic scoring could offer a broader view of the long-term economic effects of tax policy, it is often criticized for introducing greater uncertainty, requiring complex economic modeling and behavioral assumptions. Past concerns regarding the complexities of dynamic scoring led to its discontinuation in New Mexico after earlier implementations. Therefore, HM51 aims to reassess the role of both scoring methods in establishing sound fiscal policies, highlighting a critical discussion in legislative circles about how best to evaluate and forecast economic impacts under varying fiscal policies.